Paragraph superseded on 07/02/2014 after the end of the transition period stated in Accounting Standards Update No. 2013-10, Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes.
Paragraph superseded on 07/17/2019 after the end of the transition period stated in Accounting Standards Update No. 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.
Paragraph superseded on 07/10/2023 after the end of the transition period stated in Accounting Standards Updates No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.
Paragraph superseded on 12/14/2022 after the end of the transition period stated in Accounting Standards Update No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes.
Paragraph superseded on 12/14/2022 after the end of the transition period stated in Accounting Standards Update No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.
Paragraph superseded on 06/30/2025 after the end of the transition period stated in Accounting Standards Update No. 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method.
The following represents the transition and effective date information related to Accounting Standards Update No. 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements:
Effective date and early adoption
- a
For public business entities, the pending content that links to this paragraph shall be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods.
- b
For entities other than public business entities, the pending content that links to this paragraph shall be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.
- c
Early adoption of the pending content that links to this paragraph is permitted for all entities on any date on or after November 25, 2025.
Transition method
- d
An entity shall apply the pending content that links to this paragraph on a prospective basis, including the guidance described in (e) for existing hedging relationships (that is, the hedging instrument has not expired, been sold, terminated, or exercised, or the entity has not removed the designation of the hedging relationship) beginning on or after the date of adoption.
- e
For cash flow hedges existing as of the date of adoption, without dedesignating the hedging relationship, an entity may:
- 1
For hedges of variability in cash flows attributable to a group of individual forecasted transactions, modify its method for assessing similar risk exposure to a method described in paragraph 815-20-55-23A. If an entity is applying one of the methods described in paragraph 815-20-55-23A, it may elect to change to the other method. If an entity modifies its method of assessing similar risk exposure to the method described in paragraph 815-20-55-23A(a), the entity also may change its method of assessing hedge effectiveness if the revised method leverages the similar risk assessment in determining that the hedging relationship is highly effective. An entity is not required to apply the guidance in paragraph 815-20-25-81 when comparing hedging relationships executed before and after the date of adoption in relation to the guidance in (e)(1). - 2
For hedges of variability in cash flows attributable to changes in the overall price or the contractually specified component of the price in a forecasted purchase or sale of a nonfinancial asset, modify the fhedging relationship to designate the hedged risk as variability in cash flows attributable to changes in a component (or subcomponent) of the forecasted purchase price or sales price of a nonfinancial asset in accordance with paragraph 815-20-25-22C. The entity is not required to amend its hedge documentation for hedges of a contractually specified component to reflect amendments in accordance with paragraph 815-20-25-22C if the hedged risk is unchanged. - 3
For hedges of variability in cash flows attributable to a group of individual forecasted transactions:
- i
Modify the hedging relationship to add an additional hedged risk or risks to an existing portfolio if the hedging relationship continues to meet all other requirements to apply cash flow hedge accounting.
- ii
Migrate some or all of the individual forecasted transactions from one existing pool or pools to a new pool or pools, an existing pool or pools, or a combination of new and existing pools.
- iii
Reassign and reorder existing hedging instruments to a new or existing pool.
- 4
For hedges of forecasted interest payments on an existing choose-your-rate debt instrument:
- i
Amend the hedging relationship to include interest payments on replacement debt.
- ii
Specify the quantitative method that an entity will use in the event that it must assess hedge effectiveness on a quantitative basis in subsequent periods (for entities assessing hedge effectiveness on a qualitative basis).
- 5
For hedges of forecasted interest payments that may include interest payments on an existing choose-your-rate debt instrument designated as part of a group of forecasted transactions under the first-payments-received technique:
- i
Amend the hedging relationship to include only interest payments on the individual existing choose-your-rate debt instrument and replacement debt.
- ii
Specify the quantitative method that an entity will use in the event that it must assess hedge effectiveness on a quantitative basis in subsequent periods (for entities assessing hedge effectiveness on a qualitative basis).
- f
For hedges that were discontinued before the date of adoption for which amounts are still reported in accumulated other comprehensive income at the date of adoption, an entity may migrate the individual forecasted transactions to align with the pools of existing hedges considering the migration described in (e)(3)(ii).
- g
Gains or losses on hedging instruments that are reported in accumulated other comprehensive income at the date of adoption shall be reassigned using a systematic and rational manner to align with the pool or pools after the migrations described in (e)(3)(ii) and (f) and reassignments and reorderings described in (e)(3)(iii). Amounts from accumulated other comprehensive income shall be reclassified to earnings when the hedged forecasted transaction affects earnings in accordance with paragraphs . - h
If adoption of the pending content that links to this paragraph in (e) changes the designated hedged risk, an entity shall create the terms of the instrument used to estimate the change in value of the hedged risk (under the originally designated method, for example, the hypothetical derivative method, or another acceptable method in Subtopic 815-30) in the assessment of hedge effectiveness and the similar risk assessment, if applicable, on the basis of market data as of the inception of the hedging relationship. Furthermore, an entity shall amend hedge documentation upon adoption, including documentation of critical terms, the hedged forecasted transactions, hedge effectiveness assessments, and similar risk assessments, as needed to apply the pending content in (e) through (g) for all existing and discontinued hedging relationships.
Transition disclosures
- i
An entity shall disclose the nature of and reason for the change in accounting principle, as well as the method of applying the change, in both the interim reporting period and the annual reporting period that the entity adopts the pending content that links to this paragraph.